Government actions sold out Carillion’s supply chain

The government was accused of “selling out” Carillion’s sub-contractors and supply chain, by the UK’s largest union Unite, following revelations at a joint select committee today (February 27).

During the hearing of the Public Accounts and the Public Administration and Constitutional Affairs Committee, where Carillion’s former directors gave evidence it emerged that from October 2017 the government was receiving weekly updates of Carillion’s financial health, including the company’s cash flow.

From this time the government was also undertaking continuity planning for Carillion’s collapse. Despite this the Department of Transport signed a contract with Carillion on 6 November for the electrification of the London to Corby train line.

As Carillion did not normally pay invoices for 120 days, the vast majority of the work undertaken by the company’s sub-contractors after the government was fully aware of the company’s financial situation, were not paid.

It further emerged that the government was informed in mid-December, a month before the company went into compulsory liquidation, that sub-contractors owed money would only receive a penny in the pound, if the company collapsed.

So desperate were Carillion to recoup money owed to them in 2017 from the Qatar and Oman that they recruited Liam Fox the Secretary of State for International Trade to help them collect money that they were owed.

Carillion’s entire rescue plan was based on receiving support from government which was responsible for 45 per cent of the company’s income. In particular Carillion’s directors were hoping for a substantial cash injection into its contract to operate prisons’ maintenance.

Unite’s national officer for construction, Jerry Swain said: “The fact that the government were fully aware of the level of Carillion’s financial crisis and was planning for a post-Carillion world, without warning its supply chain, is a total abdication of responsibility.

“We now know Carillion resorted to begging Liam Fox to act as its debt collector in the Middle East. This is more like something from a second rate Carry On script, than the sensible financial strategy one would expect of a multinational company.

“The selling out of sub-contractors and the supply chain, has led to workers losing their jobs and company’s going to the wall. This has caused enormous damage to the construction industry which it will take years to recover from.

“How on earth did the Department of Transport ever think it was a good idea to continue to award contracts to Carillion, when the company was clearly on life-support.”

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